Two new rounds of three-party gas talks to be held in May - European Commission

Brussels will analyze the issue shortly before the European Council’s meeting in June

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BRUSSELS, May 06 /ITAR-TASS/. Two new rounds of three-party talks on gas issues between representatives of Russia, Ukraine and the European Union will be held in the middle and at the end of May, European Energy Commissioner Guenther Oettinger’s spokeswoman Sabine Berger said.

Asked by journalists about the results of the first meeting on May 2 in the Polish capital Warsaw, Berger disagreed with the viewpoint that the talks ended without effect. She said all sides stressed that three-party discussions are important and agreed to meet again.

The spokeswoman also said Tuesday the European Commission hopes all gas issues may be resolved at the end of this month.

At Warsaw’s meeting, Russian Energy Minister Alexander Novak, Ukrainian parliament-appointed Energy and Coal Industry Minister Yury Prodan and Oettinger reached an agreement to draft measures by the end of May to overcome the crisis around the deliveries of Russian gas to Ukrainian and European consumers.

Commenting on Oettinger’s statement that the purchasing price for gas should be one and the same for all EU members, Berger explained that the EU’s national energy markets are becoming ever more interconnected and gas prices should not be pegged to oil prices, so that different manufacturers and gas suppliers are able to compete with each other.

Berger said she and her colleagues will analyze the issue shortly before the European Council’s meeting in June for which they are drafting a survey on reinforcing EU energy security and cutting its dependency on Russian gas.

Gas situation

Ukrainian state energy company Naftogaz’s debt to Moscow currently stands at about $3.5 billion with the gas price standing at $485.5 per 1,000 cu m. European consumers are afraid the situation may affect transit gas supplies to Europe.

On April 10, Russian President Vladimir Putin sent a letter on the situation in Ukraine to the leaders of 18 European countries who buy Russian natural gas. In the letter, he explained in detail the current critical situation with Ukraine’s debt for Russian gas supplies, which could affect gas transit to European consumers.

Moscow recently substantially raised the price for gas supplied to Ukraine from the figure of $268.5 per 1,000 cubic meters agreed last year when an association agreement with the EU was shelved in November 2013.

In the second quarter of 2014, the price for Russian gas for Ukraine was set at $385.5 per 1,000 cu m. Russian energy giant Gazprom said earlier that the price rose from $268.5 due to the return to earlier contract agreements, as Ukraine failed to fulfill its commitments under an additional agreement concluded in December 2013, which obliged the country to pay for supplied volumes of Russian gas in time.

On April 2, Putin signed a law on denunciation of the Kharkov Accords with Ukraine, which were struck in 2010 and stipulated that Russia’s lease of naval facilities in Crimea [then part of Ukraine] would be extended by 25 years beyond 2017 - until 2042.

The Kharkov deals envisioned a discount of $100 per 1,000 cu m on Russian gas for Kiev. Now that the accords have been denounced due to Crimea’s accession to the Russian Federation, the discount will no longer be applied, raising the gas price by another $100 to $485.5 per 1,000 cu m, which is expected to make the economic situation in Ukraine even more complicated.

Coup in Ukraine and Crimea's secession

Ukraine is in political and economic turmoil following a coup that occurred in the country in February after months of anti-government protests triggered by Kiev’s decision to suspend an association agreement with the EU in November 2013 to study the deal more thoroughly.

New people were brought to power in Kiev amid deadly riots that involved radicals after President Viktor Yanukovich had to leave Ukraine citing security concerns in February 2014. Russia does not recognize the new Ukrainian authorities, who appear unable to restrain ultranationalists and radicals.

Ukraine’s crisis soured further when the Republic of Crimea, where most residents are Russians, refused to recognize the legitimacy of the new self-proclaimed Ukrainian leadership. Crimea held a referendum March 16 in which an overwhelming majority of Crimeans voted to secede from Ukraine and reunify with the Russian Federation. The accession deal with Moscow was signed two days later.

Kiev and Western nations do not recognize Crimea’s reunification with Russia despite Moscow's repeated statements that the Crimean plebiscite conformed to the international law and the UN Charter and was in line with the precedent set by Kosovo’s secession from Serbia in 2008.

Some Russian and Crimean officials and companies have been subjected to sanctions by Western nations after Crimea’s incorporation by Russia. Russia has also taken some limited punitive actions in response.

The West has threatened Russia with new economic penalties unless the country changes its foreign policy, but Moscow has dismissed the unfriendly measures saying the language of sanctions is counterproductive and will have a boomerang effect on Western nations.

Crisis spreads to southeastern regions

After Crimea’s accession to Russia, protests against the new Ukrainian authorities erupted in Ukraine’s Russian-speaking southeastern territories, with demonstrators demanding referendums on the country’s federalization and taking control of some government buildings.

Ukrainian parliament-appointed interim head of state Alexander Turchinov on April 15 announced the start of an antiterrorism operation in the Donetsk Region in eastern Ukraine. Russia has condemned the operation, which is apparently aimed to crack down on federalization supporters.

A total of 46 people died in clashes and a fire in the southern Ukrainian city of Odessa where riots started on May 2 after soccer fans who came from the city of Kharkov, as well as Right Sector far-right ultranationalist movement radicals and so-called “Maidan self-defense” representatives from Kiev organized a march along city streets.

Clashes with federalization supporters followed. Radicals set ablaze the Trade Unions House, where their opponents hid, and a tent camp where activists were collecting signatures for a referendum on Ukraine’s federalization and for the status of a state language for Russian.